Asian currencies, led by South Korea’s won, declined this week after a rally in regional stocks faltered on signs the global recession is far from easing.
The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s 10 most-active currencies excluding the yen, fell this week for the first time in a month and the MSCI Asia-Pacific Index of shares snapped a two-week rally. Europe’s economy contracted at the fastest pace in at least 13 years in the first quarter, while state-run Korea Development Institute expects the South Korean economy will shrink 2.3 percent this year, the first time in more than a decade.
“The correction we’ve seen in global equities this week probably hasn’t finished yet,” said Dariusz Kowalczyk, a strategist with SJS Markets Ltd in Hong Kong. “There’s room for further risk aversion, which would be negative for Asian emerging currencies.”
The won, Asia’s best-performing currency in the past month, declined 0.8 percent this week to 1,257 per dollar in Seoul. The Philippine peso weakened 0.8 percent to 47.635, while the Malaysian ringgit fell 0.9 percent to 3.5495.
Indonesia, Southeast Asia’s biggest economy, expanded 4.4 percent last quarter, the slowest pace in five years, the government reported on Friday. Singapore’s economy shrank the most since at least 1975 in the same quarter and Thai Finance Minister Korn Chatikavanij estimated a “pretty bloody” GDP contraction of as much as 6 percent in the same period.
The peso ended a two-week rally on speculation oil companies are purchasing dollars to pay for imports.
The New Taiwan dollar completed a fourth winning week on speculation warming relations with China will draw investment and help pull the economy out of a recession.
The currency’s gains were tempered as global funds sold US$1.1 billion more local shares than they bought this week. The benchmark TAIEX index of stocks fell 1.4 percent for the week, ending a three-week rally.
“The structural dynamics remain good for Taiwan’s dollar,” said Wai Ho Leong, a regional economist at Barclays Capital PLC in Singapore, citing prospects that Asia will lead the global economic recovery.
The selling of Taiwanese shares is likely to be temporary, he said.
The NT rose 0.3 percent this week to NT$32.950 against the US currency, according to Taipei Forex Inc. It touched NT$32.767 on Wednesday, the strongest level since Dec. 31.
Elsewhere, the Indonesian rupiah declined 0.6 percent this week to 10,438 a dollar, while Thailand’s baht jumped 0.9 percent to 34.56. China’s yuan traded at 6.8258 versus 6.8218 last Friday, while Singapore’s dollar was at S$1.4668, compared with S$1.4659.
The euro fell against the US dollar and extended a weekly loss versus the yen as the economy of the 16-nation region contracted the most in at least 13 years, raising concern the pace of recovery will be slow.
The yen extended its weekly rally against counterparts including the South African rand and Norwegian krone as a drop in stocks discouraged investors from buying higher-yielding assets funded in Japan’s currency. The euro posted its first weekly decline versus the US dollar in a month as GDP in the region shrank.
The euro slid 1.1 percent to US$1.3488 at 4:30pm in New York, from US$1.3639 on Thursday, and posted a weekly decrease of 1.1 percent. The euro lost 1.9 percent to ¥128.23 from ¥130.67 for a 4.5 percent decline this week. The US dollar dropped 0.8 percent to ¥95.07 from ¥95.80, extending its reduction this week to 3.4 percent, the biggest since October.
PLA MANEUVERS: Although Beijing has yet to formally announce military drills, its coast guard vessels have been spotted near and around Taiwan since Friday The Taiwanese military is on high alert and is closely monitoring the Chinese People’s Liberation Army’s (PLA) air and naval deployments after Beijing yesterday reserved seven airspace areas east of its Zhejiang and Fujian provinces through Wednesday. Beijing’s action was perceived as a precursor to a potential third “Joint Sword” military exercise, which national security experts said the PLA could launch following President William Lai’s (賴清德) state visits to the nation’s three Pacific allies and stopovers in Hawaii and Guam last week. Unlike the Joint Sword military exercises in May and October, when Beijing provided detailed information about the affected areas, it
CHINA: The activities come amid speculation that Beijing might launch military exercises in response to Lai’s recent visit to Pacific allies The Ministry of National Defense (MND) yesterday said China had nearly doubled the number of its warships operating around the nation in the previous 24 hours, ahead of what security sources expect would be a new round of war games. China’s military activities come amid speculation Beijing might organize military drills around the nation in response to President William Lai’s (賴清德) recent visit to Pacific allies, including stops in Hawaii and Guam, a US territory. Lai returned from the week-long trip on Friday night. Beijing has held two rounds of war games around Taiwan this year, and sends ships and military planes
Five flights have been arranged to help nearly 2,000 Taiwanese tourists return home from Okinawa after being stranded due to cruise ship maintenance issues, the Ministry of Transportation and Communications announced yesterday. China Airlines Ltd (中華航空), and EVA Airways Corp (長榮航空) have arranged five flights with a total of 748 additional seats to transport 1,857 passengers from the MSC Bellissima back to Taiwan, the ministry said. The flights have been scheduled for yesterday and today by the Civil Aviation Administration, with the cruise operator covering all associated costs. The MSC Bellissima, carrying 4,341 passengers, departed from Keelung on Wednesday last week for Okinawa,
US president-elect Donald Trump said he would “never say” if Washington is committed to defending Taiwan from China, but “I would prefer that they do not do it [ an attack],” adding that he has a “good relationship” with Chinese President Xi Jinping (習近平). “I never say because I have to negotiate things, right?” Trump said in an interview with NBC’s Meet the Press host Kristen Welker after saying he would not reveal his incoming administration’s stance on Taiwan’s defense in the event of an attack. Asked the question again, Trump, in a reference to China, said: “I would prefer that they
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